MTECHTIPS:-Gold prices gain slightly in early Asia with PBOC ‘s next move awaited

MTECHTIPS:-Gold prices gain slightly in early Asia with PBOC ‘s next move awaited

Gold prices rose in early Asian trade on Thursday with investors continuing to keep an eye on China and look ahead to other central bank actions regionally on rates. On the Comex division of the New York Mercantile Exchange, gold for December delivery rose 0.11% at $1,124.30 a troy ounce. Silver for September delivery was up a slight 0.03% at $15.525 an ounce and copper for September delivery was flat at 2.349 a pound. Overnight, gold futures surged on Wednesday amid a weakening dollar, as the People’s Bank of China took initial steps to stabilize fluctuations in the yuan one day after devaluing its currency by the highest amount in more than two decades. In Beijing, the People’s Bank of China (PBOC) intervened to prop up its tumbling currency after the yuan fell to a fresh three-year low midway through Wednesday’s Asian session. One day after the Chinese central bank rattled global markets by unexpectedly devaluing its currency by 1.9%, the bank lowered the daily fix even further on Wednesday morning. Hours later, the renminbi slid to an intraday low of 6.4460 against the dollar around 3 a.m. EST, as currency traders continued to unload their long positions in the currency. The sell-off forced the PBOC into action, as it intervened late in the session to help the yuan pare some of its earlier losses. At the close of Asian trading, USD/ CNY settled at 6.3877, up 0.0622 or 0.98% on the day. China is the world’s largest producer of gold and second-largest consumer behind India. A rash of disappointing economic data in recent weeks has forced the PBOC to institute a wide range of stimulus measures aimed at boosting its flagging economy. Last weekend, the PBOC reported that Chinese exports plummeted by 8.3% in July marking its largest monthly decline since May. By devaluing the yuan, the PBOC hopes to make exports more competitive by making them relatively less expensive for foreign purchasers.
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